Chapter Six Abraham Lincoln: Last President to
fight the money Power
Abraham Lincoln was the last
of several populist presidents to
fight against the money monopoly. Lincoln from the very beginning of his
Administration faced a
heavy burden of financing the Civil War with a monetary system under
private control. During the Civil
War the Union government was
hardpressed to raise sufficient funds to pay troops, there was a shortage of coin and the private
banking system was unwilling to
meet the needs of the Union Army without personal gain. Lincoln was in the
Jeffersonian-Jacksonian tradition. This
tradition reserved the right to issue currency to the Federal Government and argued that this right
could not lawfully be transferred
to a private monopoly. In 1862 Lincoln presented to Congress a bill to make United States notes full legal
tender and so enable the Federal
Government to print sufficient paper money to finance the Civil War. Presumably while Lincoln did
not envisage the inflationary
potential in expanding the government's
spending power there is little question that his financial program was intended as a means of paying off
debts and
49 The
Federal Reserve Conspiracy government expense without allowing the
private money monopoly to profit
from the public purse.
Unfortunately, Lincoln's Secretary of the Treasury, Samuel Portland Chase, was an ally of the
banking interests. During the Civil
War Chase supported Lincoln's monetary policy but later presented legislation to Congress favorable to
the banking interests. Similarly
Senator John Sherman, responsible for Senate passage of financial legislation, added even more financial
power to that already granted the
money monopoly in the form of National Bank legislation. Lincoln's legal tender bill was
reported on February 25, 1862.
This was to issue $150 million of legal tender United States notes.
At that time Secretary Chase
commented: I have a greater
aversion to making anything but coin a
legal tender in payment of debt;. ..it is however at present impossible in consequence of the large
expenditure entailed by the war to
procure sufficient coin for disbursements: And it has therefore become indispensably necessary that we should
resort to the issue of United
States notes. (1> In
similar manner Senator John Sherman of Ohio advocated the measure on the grounds, "in no
other way could the payment of the
troops and the satisfaction of other just demands be so economically
or so well provided for." However this program of a
national currency was opposed by the
New York banking interests and Senator John Sherman's advocation
did not, as we shall see later,
reflect his true intent. (To be repeated in 1913 by Senator Owen and Congressman Glass who misrepresented
their true positions to the public
on the Federal Reserve Act.)
The idea of a national currency was opposed by banking interests, the money power, because it would
obviously remove from bankers the
privilege of issuing an effective 50 Abraham Lincoln: Last President to Fight
the Money Power substitute
for money (defined in the Constitution as gold and silver). What bankers wanted the government to
undertake was transfer the right
to issue money to banking interests, i.e., to allow bankers to act as agents of the Federal Government. The
U.S. Government would then be a
perpetual borrower required to borrow funds at interest from a private money monopoly - which had
obtained the monopoly power from
the government itself. Given the restrictions of the Constitution, banking interests had to tread
carefully. The Clinton
Roosevelt (Bank of New York) proposal was to remove the Constitution, shadowed in the late 20th century
by the Trilateral Commission pleas
that the Constitution is outdated.
Moreover the public itself, apart from Constitutional limits, would hardly agree to a private money
monopoly if the truth were to be widely
known. So we find from the time of Jefferson to the 1990s that any discussion of a private money monopoly
is quickly and thoroughly
suppressed. Nothing is more dangerous to the power of the elite
than the public discovery and
understanding of the private control of money supply.
What the bankers wanted in the 1860s was for the government to issue interest-bearing bonds. These
bonds were to be used as the basis
of bank credit. While Lincoln pushed his legal tender act the
bankers met to draft what became
the National Bank Act of 1863.
The purpose of the National Bank Act was to give control of the money issue to bankers. This monopoly
could be used for profit and with
the Civil War, profits would be substantial. The difference between Lincoln and the money power
was essentially whether the medium
of exchange (convertible bank notes
and inconvertible bank credit transferred by check) was to be
created and issued by 51 The Federal Reserve Conspiracy
_ private
monopoly or government monopoly. In other words, whether the power of government is subordinate
to a banking elite or bankers
subject to the power of government which, if Congress did its job honestly, also means subordinate to the
power of the people. An
extraordinary letter from Senator John Sherman to Rothschild Brothers in London dated June 25, 1863
(and leaked on Wall Street in
1863) demonstrates the double dealing of even "prominent" and
"well regarded"
politicians. Sherman saw a
chance to curry favor with the preeminent world bankers of the time and personally brought the possibilities
of the proposed National Banking
Act to the attention of international bankers. On the following pages we reproduce a letter from
Rothschild Brothers (London) to
Ikleheimer, Morton and Vandergould (Wall
Street, New York) acknowledging receipt of a Sherman letter and relaying its contents. These bankers
reply to Rothschild Brothers on
July 6, 1863, with details of the National Banking Act and some insights into the character of Senator
John Sherman. London, June
25, 1863; Messrs. Ikleheimer,
Morton and Vandergould No. 3, Wall St., New York, U.S.A. Dear Sirs:
A Mr. John Sherman has written us from a town in Ohio, U.S.A., as to the profit that may be
made in the National Banking
business, under a recent act of your Congress; a copy of this act accompanies this letter. Apparently this act has been
drawn up on the plan formulated
here by the British Bankers Association, and by that Association recommended 52 Abraham Lincoln: Last President to Fight the
Money Power to our American
friends, as one that if enacted into law, would prove highly profitable to the banking fraternity throughout the
world. Mr. Sherman declares
that there has never been such an
opportunity for capitalists to accumulate money as that presented
by this act. It gives the National
Bank almost complete control of the
National finance. "The few who understand the system," he
says, "will either be so
interested in its profits, or so dependent on its favors that there will be no opposition from that
class, while on the other hand, the
great body of people, mentally incapable of comprehending the tremendous advantages that Capital
derives from the system, will bear
its burden without complaint, and perhaps without even suspecting
that the system is inimical to
their interests.... Your
respectful servants Rothschild
Brothers New York
City July 6, 1863 Messrs. Rothschild Brothers, London, England. Dear Sirs: We beg to acknowledge receipt of
your letter of June 25, in which
you refer to a communication received of Honorable John Sherman of Ohio, with reference to the advantages
and profits of an American
investment under the provisions of the National Banking Act. Mr. Sherman possesses in a marked
degree the distinguishing
characteristics of a successful 53 The Federal Reserve Conspiracy financier. His temperament is
such that whatever his feelings may
be they never cause him to lose sight of the main chance. He is young, shrewd and
ambitious. He has fixed his eyes
upon the Presidency of the United States and is already a member of Congress (he has financial
ambitions, too). He rightfully thinks
that he has everything to gain by being friendly with men and institutions having large financial
resources, and which at times are
not too particular in their methods, either of obtaining government aid, or protecting
themselves against unfriendly
legislation. As to
the organization of the National Bank here and the nature and profits of such investment we beg leave to refer
to our printed circulars enclosed
herein, vis: "Any
number of persons not less than five may organize a National Banking Corporation. "Except in cities having 6000 inhabitants or
less, a National Bank cannot have
less than $1,000,000 capital.
"They are private corporations organized for private gain, and select their own officers and
employees. "They are
not subject to control of State Laws, except as Congress may from time to time provide. "They may receive deposits
and loan the same for their own
benefit. They can buy and sell bonds and discount paper and do a general banking business. 54 Abraham Lincoln: Last
President to Fight the Money Power
"To start a National Bank on the scale of $1,000,000 will
require purchase of that amount
(par value) of U. S. Government Bonds. "U. S. Government Bonds can now be purchased at
50% discount, so that a bank of
$1,000,000 capital can be started at this
time for only $500,000.
"These bonds must be deposited in the U.$. Treasury at Washington as security for the National
Bank currency, that will be
furnished by the government to the bank. "The United $tates Government will pay 6%
interest on the bonds in gold, the
interest being paid semi-annually. It will be seen that at the present price of bonds the interest
paid by the government itself is 12%
in gold on all money invested. "The U.$. Government on having the bonds
aforesaid deposited with the
Treasurer, on the strength of such security will furnish National currency to the bank
depositing the bonds, at an annual
interest of only one per cent per annum. "The currency is printed by the U.$. Government
in a form so like greenbacks, that
the people do not detect the difference although the currency is but a promise of the bank to pay. "The demand for money is so
great that this money can be readily
loaned to the people across the counter of the bank at a discount at
the rate of 10% at thirty to sixty
days time, making it about 12% interest on the currency.
"The interest on the bonds, plus the interest on the currency
which the bonds secure, plus
inciden- 55 The Federal Reserve
Conspiracy tals of the
business, ought to make the gross earnings of the bank amount to from 28% to 33-1/3%. "National Banks are
privileged to increase and contract
their currency at will and, of course, can grant or withhold loans as they may see fit. As the banks have
a National organization and can
easily act together in withholding loans or extending them, it follows that they can by united action
in refusing to make loans cause a
stringency in the money market, and in a single week or even a single day cause a decline in
all products of the country.
"National Banks pay no taxes on their bonds, nor on their capital, nor on their deposits. " Requesting that you will regard
this as strictly
confidential.... Most
respectfully yours,
Ikelheimer, Morton and Vandergould (3) It was particularly important to international bankers
that they succeed with Lincoln. If
Lincoln implemented public control of finance in the United States then other nations would pluck up
courage to strip financial power
from their bankers. European
bankers, especially those in England, organized against Abraham Lincoln and used commercial
banking channels to pressure
bankers in the U.S. for support. The Legal Tender Bill wanted by Lincoln was subjected to intense
lobbying in Washington and so loaded
with amendments as to become useless. One amendment required that interest on bonds and notes - mere
pieces of paper - was to be paid
twice a year in gold coin. Suffocation by ridiculous amendments was successful. Defeat of the Legal Tender
Bill was followed in 1862 by a
bill to allow banks to issue private bank notes less than $5.00 within
the 56 Abraham Lincoln: Last
President to Fight the Money Power
pistrict of Columbia, a first step towards a privately controlled
fiat money supply. On July 23, 1862 Lincoln vetoed
the Private Bank Note Bill on
grounds that it was the responsibility of the Federal Government to provide a circulating medium and that
United States notes could equally
fulfill the function of small private notes. This veto was Lincoln's challenge to the banking
interests. Lincoln was a
caustic critic of bankers. A delegation of New York bankers came to Washington to lobby in favor of the Legal
Tender Bill. The Secretary of the
Treasury introduced the delegation as follows: These gentlemen from New York have come to see
the Secretary of the Treasury
about our new loan. As bankers they are
obliged to hold our national securities. I can vouch for their patriotism and loyalty, for, as the Good
Book says, "for where the
treasure is, there will the heart be also. " Lincoln replied: There is another
test that I might apply,
"Wherever the carcass is, there will the eagles be gathered
together."^; Lincoln's
national currency scheme was in direct opposition to the international bankers who at that time
planned to extend the Bank of
England gold standard private money to the United States. Later in the 20th century bankers went for fiat
money not backed by gold but in the
mid- 19th century the gold-silver system offered more opportunities
for personal gain. Lincoln was proposing that
instead of the Federal Government
borrowing paper or created money from the bankers that the bankers borrow coin or gold from the Treasury.
In this way the banking interest
would be unable to create fictional wealth from the printing press. 57 The Federal Reserve
Conspiracy The National Bank
Act was presented to the United States
as a device to raise money to run the Civil War and achieve financial stability. Under the Act any
five persons could form a bank
with a capital of $50,000 or more. After deposit in the United States Treasury of
interest-bearing bonds equal to one-
third of the paid-in capital, the Government would print National Bank certificates on behalf of the bank
to the amount of 90 percent of the
part value of the bonds printed.
These National Bank certificates could then be used by the bank to carry on banking business and
receive full profit on them as
though they were the bank's own notes. Furthermore the bank received from the Federal Government
interest payments in gold coin on
bonds deposited in the Treasury.
In other words the bankers had a double profit. First, interest on government guaranteed money issues
and second, interest paid on bonds
in gold. The National Banking Act was a guaranteed profit making machine for anyone who wanted to get into banking. Once again the Jeffersonian-Jacksonian tradition
raised its voice. It claimed that
the National banking system would create
an even greater centralization of the money power than the Bank of the United States - which Andrew
Jackson had vetoed. This
time around the money power was much more
organized. The National Banking Bill was in the Senate only three or four days and in the House only two
days before it was rushed through
at a particularly critical time in the Civil War. The Bill was signed into law by President
Lincoln on February 25, 1863. 58 Abraham Lincoln: Last President to Fight the
Money Power
Endnotes to Chapter Six (1) Letter from Secretary of the Treasury
Chase to Elbridge, G. Spaulding,
January 29, 1862. Quoted in American Nation History Series, 1861-1863 by Hosmer, vol. 20, pg. 169. (2) John R. Elsom, Lightning Over
the Treasury Building (or an
expose of our banking and currency monstrosity, Americas most reprehensible and un-American racket),
(Boston: Meador Publishing Co.,
1941), pp. 51-52. (3) Op.
cit. pp. 53-55. (4)
Ibid. 59 Chapter Seven: THE MONEY TRUST CREATES THE FED
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